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IN THIS ISSUE
DECEMBER 2006
- A Letter from CEO Michael Dunn
- How Far Can a Brand Streeeetch?
- Very Vera May Compromise Wang's Brand
- Aaker on Brand Portfolio Strategies
- Prophet Recommends...
- In the News
A Letter from CEO Michael Dunn
Effective brand portfolio management might be one of the thorniest challenges that senior marketers deal with on a day-in, day-out basis. Is the portfolio appropriately structured to optimize brand power? Is the investment level appropriate to brands’ maturity and the role they play in business growth? Are they being leveraged in ways that are relevant to customers?
In this issue of Prophet’s newsletter, we look at brand portfolios and how to ensure they’re advancing the business. We have some fun sharing results of our internal poll on the best and worst brand extensions with “How Far Can a Brand Streeeeeetch?” and also share Steve Chang’s thinking about how “Very Vera May Compromise Wang’s Brand.” (This piece is highlighted by results of our last poll on the topic.) And we also share some of David Aaker’s thinking on brand portfolio strategies.
We hope you enjoy this issue, and as always we welcome your comments. And we wish you a wonderful holiday season along with a prosperous 2007.
Best,
![[Signed, Michael Dunn]](/campaign/images/sig-dunn.gif){kind=small}
Michael Dunn
CEO & Chairman
m_dunn@prophet.com
Building Great Brands and Businesses
Back to TopHow Far Can a Brand Streeeeetch?
Each year, zealous marketers attempt to wring more value from their hard-working brands with extensions that range from the ridiculous to the sublime. So, who in 2006 displayed the keenest understanding of their brand’s sweet spot and who needs a refresher course? Prophet did its own internal mini-poll; we share some of our faves.
Best overall extensions: Never mind the usual suspects: Nike and the Apple iPod and the Mini and Puma co-branded extensions. In our book, Starwood gets high marks for helping to reinvent the hospitality industry through a series of innovative extensions that put the customer firmly front-and-center. Its new Gen Y offering, Aloft, and its new extended stay property, Element, are painstakingly designed around the customer experience. And kudos, as well, to Westin for getting it right with the launch of its new Breathe (smoke free) property. Also hot: Zippo’s extensions into grills and outdoor accessories (Tiki torches) that are tightly tied to its promise of “reliable flame.”
Best and worst food extensions: An opportunity to get your full serving of fruits and vegetables in one glass? That is the feat Campbell Soup Co. achieved with its launch of V8 Fusion. The product is 100% juice and appeals to those interested in the health benefits of V8, minus an overbearing tomato flavor. It comes in three flavors, and more are being launched in 2007. Then there’s Harley Davidson, a brand with no real food associations (the Hog nickname aside) that still attempted a cake decorating kit in 2005, and a beef jerky line in 2006.
Best celeb brand productization: We’re still not sure why or how Paris Hilton rates celebrity status, but her best talent may lie in her ability to milk it. Her forays into clubs (Club Paris) are certainly smack-dab on brand, her line of jewelry and watches, and her jewel-themed mobile games (“Paris Hilton’s Jewel Jam” and “Paris Hilton’s Diamond Quest”) also fit well with her image as part of the glitterati. But with all of the good, also comes the bad. Paris’ first solo album, titled simply “ Paris” (released on her own “Heiress” record label), was a failed attempt at the celebutante’s singing career.
Best brand resurrection: The drive toward environmental correctness combined with practicality given gasoline prices has put new zip in the Vespa brand. These scooters, originally developed in Italy in 1946, were introduced to the American market in 2000, and the brand has boomed ever since. Its cult-like following has given rise to Vespa clubs and rallies around the world, with the brand representing not just a social outlet but a distinctive style known for both its form and function. It’s not just a predominant mode of transportation for thousands, but a vintage model is displayed in New York’s Museum of Modern Art.
Worst overall extension: While a move into fine wines could be a good fit for a high-end label, “Diesel” and “Wine” together create less than tasteful imagery that makes you wonder just what they were thinking!
Very Vera May Compromise Wang's Brand
By Steve Chang, Partner
Fashionista Vera Wang, best known for her glamorous, high-end bridal gowns, is offering an exclusive line of clothing and accessories at Kohl’s – a move that may sully her skirts.
The new line, “Very Vera by Vera Wang,” follows the trail of Martha Stewart, architect Michael Graves and designer Isaac Mizrahi, who have helped the likes of Kmart and Target deliver additional on-trend value.
Yet in going mainstream, Wang risks incurring very real damage to her brand, which may not have been the case with other style icons, or with Wang’s other efforts to broaden the base of her brand’s appeal – as in her recent launch of a luxury mattress through Serta.
At first glance, the Wang/Serta alliance appears as jarring as the Wang/Kohl’s pairing. But Serta’s luxury connotations dovetail well with Wang’s brand positioning. Not so Kohl’s, which lacks a distinctive fashion or apparel positioning. The strength of Wang’s brand lies in her ongoing attention to fashion and style, something that may conflict with Kohl’s proposition of everyday brands for everyday occasions.
It goes to underscore the perils of brand extensions, which are most successful when the right balance is struck between mass appeal that drives volume and the ability to retain the key brand equities that are fundamental to a brand’s distinctiveness.
Had Wang created more distance via a subbrand for her rollout with Kohl’s, she might have provided better protection to her core brand. That’s what Levi Strauss did with its Signature series line of jeans. But even that’s no guarantee of success; Polo Ralph Lauren is now pulling back on its licensing deals after deciding the cost to its image is not worth the extra revenues.
With this merchandising deal, Wang stands to make a lot of money – in the short-term. Her more important concern, however, should be the ultimate cost to the long-term success of the Vera Wang brand.
Steve Chang (schang@prophet.com) is a partner at Prophet. This piece is adapted from an article he wrote for the Oct. 16 issue of BrandWeek.
View results from our last newsletter poll on this topic, where we asked our readers whether or not this is a good extension of Vera Wang's brand.
Aaker on Brand Portfolio Strategies
If your business is like most, it’s managing a portfolio of multiple brands.
“Managing” is the operative word, given three-quarters of the Fortune 1,000 boast at least 100 brands, and the numbers continue to grow. The universal challenge is to understand and execute both the strategies and the processes to ensure brands are doing the optimum job of driving business performance.
We asked our vice-chairman David Aaker’s views on the most common brand portfolio challenges and solutions.
Q: How does the proliferation of brands play into the increasingly pressing issue of marketing effectiveness?
Aaker: Marketing investment dollars are pretty hard fought these days, and the overabundance of brands and offerings diffuses the resources available to support them. Marketers must manage their portfolios with an eye toward how well each brand supports the business. This means evaluating each brand’s ability to drive sales, how it helps differentiate the family of offerings, and its strategic role in the overall business. By identifying which brands should be eliminated or the extent to which they should be supported, resources can be more effectively allocated – ultimately optimizing performance and financial returns.
Q: What is one of the most common issues that leads to underperforming portfolios?
Aaker: Too often, I see brand-building resources dictated by autonomous business units that use profits from mature brands to protect their businesses. In the meantime, promising brands are too under-supported to reach their full potential. A better approach is to centralize brand-building responsibilities to gain an organization-wide perspective of which key brand platforms will best support future business strategy – and how resources can best be allocated to achieve that goal.
Q: Particularly in maturing markets, there’s often a lack of differentiation among brands. What’s the cure?
Aaker: One solution that we’ve seen work well is to devise a “branded differentiator,” or a branded feature, service, program, or ingredient that’s meaningful to customers. The Westin Hotel’s highly successful “Heavenly Bed” is a terrific example.
A second is to dial up organizational associations that are unique. Look to heritage, culture, programs, and people. As an example, Whole Foods' slogan, 'Whole Foods, Whole People, Whole Planet', is more than just lip service. It is integrated throughout all marketing, brand, and business activity.
A third is to develop or exploit a brand personality. Among the airlines, a very undifferentiated space, consider how Southwest, Singapore, and Virgin have differentiated their brands on the basis of their personality.
Q: And what about some of those mature brands that seem bland and tired?
Aaker: Those can be energized by finding and linking to an actively managed product, symbol, or endorser that, by association, enhances or revitalizes a target brand over time. A great example is the Avon Breast Cancer Foundation. Another is the iPod’s impact on the Apple brand. Still another is the impact of Tiger Woods on the rather bland Buick brand.
Aaker addresses these and related issues in his most recent book, Brand Portfolio Strategy: Creating Relevance, Differentiation, Energy, Leverage and Clarity, as well as other articles (http://www.prophet.com/insights/books/bpsarticles.html).
Prophet Recommends...
Prophet articles, web casts
Brand Portfolio Strategy: Managing and Investing in the Right Brands to Drive Business ResultsBy Scott Davis, Senior Partner
In this first web cast of a three-part series ("Using Brands to Drive Growth") originally presented to members of the American Marketing Association, Scott Davis reveals how to manage a portfolio of brands to optimize business growth and profoundly affect your firm's profitability.
Prophet's Perspective on Brand Portfolio Strategy: Building a Better Foundation for Brand, Business SuccessBy Kevin O'Donnell, Senior Partner
Businesses generate up to 90% of their profits from fewer than 20% of their brands, various studies have shown. This suggests that many companies are missing an opportunity to gain both more efficiency and effectiveness from their brand portfolios.
Expand Your Brand's Sweet SpotBy Scott Davis, Senior Partner
The article addresses the importance of continuing to understand and manage your brand's sweet spot in order to increase likelihood of success of new products, exert more channel power and drive your companies growth.
Most frequently downloaded from www.prophet.com
Prophet's State of Marketing SurveyMarketing's role in driving growth is threatened by the chasm between its need to influence the customer experience and its ability to do so. Leveraging the internal relationships necessary to impact the customer experience that drives business growth is a huge obstacle, with many marketers claiming no role whatsoever in shaping key customer touchpoints. This gap is one of the highlights of the new 2005 State of Marketing Survey sponsored by Prophet and conducted by IDG Research. (Summer 2005)
Other articles of interest
Kellogg Positions Special K as Megabrand
AdAge, November 7, 2006
Extends $500 million business into protein barns and waters
Eukanuba’s New Marketing Strategy
AdAge, November 1, 2006
New ‘Feed the Breed’ campaign focuses on breed-specific dog chow
Free Yourself from the Tyranny of Metrics
AdAge, November 20, 2006
Misapplying measurement tools can squeeze the life out of marketers’ innovation
In the News
Prophet Launches Madrid office
We continue to expand our global reach as we ready the opening of our new office in Madrid on Jan. 15. The office augments our European presence and current operations in London, Hamburg, and Zurich. Coming on board to head the new office and spearhead our efforts in Spain is Joseph Gelman, who was integral to launching BBDO Consulting’s Madrid office and who previously worked as a consultant with McKinsey. Joseph will be leading a team of consultants, all with strong backgrounds in the development of brand and marketing strategies.
Roland Bernhard to lead Zurich office
Also on the international front, we’re pleased to have
2006-2007 State of Marketing study
Stay tuned! Our 2006-2007 State of Marketing study is underway, with findings to be released in February. This latest examination of the most pressing issues that are shaping marketing’s role and influence on the business focuses on marketing effectiveness – and all its implications.